Genomic Health At A 52-Week High: What's Driving The Stock?

Shares of Genomic Health, Inc. (NASDAQ:GHDX) scaled a new 52-week high of $35.57 on Dec 15, closing the session nominally lower at $35.55. The company has gained 10.1% in the last six months, higher than the S&P 500’s 9.2%. Genomic Health has also outperformed the broader industry’s decline of 1.3%. The stock has a market cap of $1.24 billion.

In the last reported third quarter of 2017, Genomic Health reported adjusted earnings per share (EPS) of 3 cents comparing favorably with the Zacks Consensus Estimate of a loss of a cent per share. The company’s current-year earnings growth rate is favorable at 80.9% as compared with the broader industry’s 6.1% and the S&P 500’s 23%.

Factors Driving the Stock

Deals to Boost Prostate Cancer Test: Genomic Health’s U.S. prostate cancer business has consistently improved over the last few quarters. Increased adoption of this test has further strengthened evidence to support private reimbursement. This month, the company announced a multi-year research collaboration agreement with Janssen Pharmaceuticals. Through this partnership, the companies will evaluate the responsiveness of Genomic Health’s Oncotype DX Genomic Prostate Score (GPS) test to Janssen’s prostate cancer drug pipeline.

In November, Genomic Health announced an exclusive licensing agreement with biotechnology company Cleveland Diagnostics, Inc. Per the agreement, Genomic Health will be authorized to develop and market early- and late-stage new prostate cancer diagnostics tests based on Cleveland Diagnostics' proprietary IsoPSA reagent and SIA technology.

Expanding Coverage for Tests: Genomic Health has witnessed healthy progress with respect to expanding coverage for its Oncotype DX breast cancer test. It established private coverage for the test in Germany as well. Within the prostate cancer business, the Oncotype DX Genomic Prostate Score test received a positive Local Coverage Determination to expand Medicare coverage by Palmetto GBA.

Solid International Business: Genomic Health’s revenues have been rising on a year-over-year basis on solid performance in the United States and internationally. During the third quarter of 2017, international test volumes increased 14%, representing 26% of total test volumes while revenues grew around 7% year over year. For the fourth quarter, Genomic Health expects double-digit test growth from the international business.

Zacks Rank & Key Picks

Genomic Health carries a Zacks Rank #3 (Hold).

A few better-ranked medical stocks are PetMed Express, Inc. (NASDAQ:PETS) , Align Technology, Inc. (NASDAQ:ALGN) and Luminex Corporation (NASDAQ:LMNX) . Notably, PetMed, Align Technology and Luminex sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

PetMed has a long-term expected earnings growth rate of 10%. The stock has rallied roughly 97.5% over a year.

Align Technology has a long-term expected earnings growth rate of 28.9%. The stock has gained 133% in a year.

Luminex has a long-term expected earnings growth rate of 16.3%. The stock has gained 5.2% over the past three months.

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